CRANES:
AN UNDERWRITING GUIDE


Prepared by IMUA's
Construction, Installation & Contractor's Equipment Committee


Copyright 2008 © Inland Marine Underwriters Association Association



IMUA STATEMENT

The Inland Marine Underwriters Association [IMUA] is a not-for-profit association focused on the commercial inland marine insurance line of business. IMUA was organized in 1930 as a national trade association and rating bureau for all inland marine classes. In 1948 the rating bureau activities of the IMUA were transferred to the Inland Marine Insurance Bureau (now defunct) due to the 1944 US Supreme Court decision in the South-Eastern Underwriters Association case.

Today, IMUA is comprised of --

  • Members - insurance and reinsurance companies that underwrite a significant portion of the commercial inland marine insurance in the U.S.
  • Associate Members - companies or organizations that provide products and/or services to the insurance industry.
IMUA is committed to advancing the educational, governmental, regulatory and technical interests of the commercial inland marine insurance industry.

One of the services IMUA provides its members is the publishing of information for use by underwriters, loss control and claims specialists, and other interested parties. The topics covered by IMUA Reports, Bulletins and News Articles are intended to provide an overall awareness of the issues, hazards and exposures associated with a specific industry or inland marine class of business.

Volunteer members of a technical committee of the IMUA or IMUA staff have produced this information. Committee members comply with all applicable laws including competition and trade regulations while compiling information.

It is generally not possible to treat any one subject in an exhaustive manner, nor is it IMUA’s intent to do so. No warranties are made regarding the thoroughness or accuracy of the report or any part of it. Nothing in this report should be interpreted as providing definitive guidance on any question relating to policy interpretation, underwriting practice, or any other issues in insurance coverage.

IMUA does not prescribe to its members how to make underwriting or claims decisions, nor does it require that analysis follow any particular format.


I. INTRODUCTION

Modern cranes fall into two general functional categories - those employed in specific applications (e.g. manufacturing, industrial, container and port cranes), and those used by the construction industry. For the purpose of this report, IMUA will focus mainly on the construction industry.

The construction industry operates in one of the most dynamic and hazardous work environments. While there are numerous factors behind construction site claims, cranes are involved in as many as one-third of all events. Cranes can be described as the most important, most expensive, most problematic but least understood of all the pieces of contractor’s equipment found on a construction site.

The basic engineering principles used in the construction of cranes involve the full spectrum of both mechanical and structural design. While cranes share a common goal - the lifting or lowering of loads - the types and uses of cranes fall into a wide array of applications. And these uses are subject to a number of environmental conditions and external forces including:

  • Geographic location;
  • Terrain;
  • Wind;
  • Weather;
  • Frequency of use; and
  • Operator's experience and skill level.
For the underwriter of this class of business, the proper analysis of each exposure can be a daunting challenge. To assist in this task, the following paper is designed to provide a broad overview of the various elements of crane underwriting, as well as to offer additional resources that may help expand one’s knowledge of cranes.


II. TYPES OF CRANES

There are numerous manufacturers and models of cranes and they vary in size, use, lifting capacity and sophistication of operating controls. As the needs of the various industries served by manufacturers change, so too does the nature of the crane. The following represents a brief overview of the types of cranes and their characteristics that may help one determine the risk and exposure.

MOBILE CRANE TYPES

This general category encompasses various types of cranes that can be classified as -

  • All Terrain Cranes
  • Hydraulic Rough Terrain Cranes
  • Hydraulic Truck Mounted Cranes
  • Lattice Boom Truck Cranes
  • Lattice Boom Crawler Cranes
  • Industrial Cranes
  • Boom Trucks/Knuckle Boom Cranes
Mobile Cranes can then be further divided into two main groups -
  • Telescoping [booms that can be extended, usually via hydraulic means]
  • Lattice Booms [generally a fixed boom]
Additional configurations of Mobile Cranes can also include tower and luffing tower cranes and heavy-lift mobile cranes.

Basically, the operating characteristics of Mobile Cranes are the same as they all include the following:

  • Boom Lengths are adjustable (telescope and manual)
  • Boom Angles are adjustable (booms are raised and lowered)
  • Loads may be swung
  • The cranes can travel around job sites under their own power
  • All cranes are equipped with load moment devices that, when properly configured, will assist the operator in making the lift.
OPERATOR ASSIST DEVICES

All cranes are required to be equipped with an anti-two blocking device that prevents the load from being raised into the boom tip causing damage and possibly dropping the load.

All cranes are also required to have a load limiting device that is intended to prevent the crane operator from performing any function that would cause him/her to exceed the rated capacity of the crane or putting the crane into any unsafe configuration. Unfortunately, with the exception of tower cranes, this device may be easily bypassed or overridden and is a leading cause of crane accidents.

The following pages will give a brief explanation of various types of cranes used in the construction industry.

ROUGH TERRAIN

The Rough Terrain Crane has basically been designed and built to facilitate travel across uneven, rough and broken ground found on construction sites. To assist in this movement, they are fitted with oversize tires and most have 4x4x4 or 4 wheel drive and generally have 4 wheel steering making them highly maneuverable and capable of working in confined spaces. They utilize outriggers to stabilize and level the crane during operation as shown in the picture. One disadvantage with this type of crane is they cannot travel great distances on roads or highways, therefore they are often transported to and from the job site on trailers.

The Rough Terrain Crane is designed for "Pick and Carry" operations, although they are still subject to the same restrictions of operation as other Mobile Cranes. Capacities generally range between 10 and 100 tons.

Rough Terrain Cranes, like other types of truck-mounted cranes, utilize hydraulic telescoping booms, and may be supplied with full power or pinned booms, swing away (lattice) boom extensions and telescopic "stinger" boom extensions. Rough Terrain Cranes may also be fitted with ‘Cantilever’ (fold down) or "Box and Beam" (out and down) type of outriggers.

Rough Terrain Cranes can be fitted with two operator cab mountings:

  • Cab Up (swing cab) - operator's cab is usually mounted in the center of the crane so that it revolves with the boom
  • Cab Down (fixed cab) - the operator's cab is fixed [usually on the front part of the chassis] and does not rotate as the crane boom rotate
Rough Terrain Cranes are popular with crane rental companies and general contractors because of their versatility, and frequently are 'bare' rented (without operator).

TRUCK MOUNTED [TM]
HYDRAULIC OR LATTICE BOOM

Although known as a "Truck Mounted" Crane, these types of cranes are not mounted on a conventional truck chassis, but are mounted on specially designed carrier frames designed to withstand the stresses of constant lifting and lowering of heavy loads.

The Truck Mounted Crane can be supplied with either a hydraulic telescopic boom or a lattice boom configuration. Like the Rough Terrain Crane, the telescopic boom can have full power or pinned extendable booms which allow the operator to extend the main boom from the operating seat; in addition to the manually extended "swing-way" lattice extensions and telescopic "stinger" extensions.

One advantage of the telescopic boom is it can be brought over the road at reasonable highway speeds to a job site and be ready for work in a matter of minutes, whereas a lattice boom can take several hours and a lot of extra transport before the crane is ready for operation. An advantage of a lattice boom crane is they generally have greater lifting capacities at radius than a hydraulic crane of the same gross capacity. The hydraulic version has lifting capacities ranging from 25 to 110 tons. The lattice boom truck crane has capacities generally between 140 and 300 tons.

A disadvantage of the Truck Mounted Crane is it is not as compact as a rough terrain model, and therefore cannot maneuver throughout refineries, plants and other confined spaces as easily because they are usually front axle steering only.

The Lattice Boom can be made longer or shorter by manually adding or removing boom sections. The boom sections can be fitted in lengths from 10 feet to 50 feet. A jib extension may also be fitted to the main boom head. One major advantage of a lattice boom crane is they generally have greater lifting capacities at radius than a hydraulic crane of the same gross capacity due to the fact that the lattice boom is much lighter.

Both types of cranes are frequently rented 'operated and maintained' by the rental company.

All TERRAIN [AT]

Over time crane manufacturers recognized the advantages and disadvantages of maneuverability, road travel and rough terrain capabilities, and took the best operating features of the Rough Terrain and Truck Mounted Cranes and combined these features into one - the All Terrain.

This versatile carrier chassis design incorporates multiple drive, steering and floating axles that allow it to be transported over the road at near highway speeds (40 - 50 MPH), and at the same time have excellent off-road handling and maneuverability. In addition, crane manufacturers build suspension systems with the ability to increase the crane's ground clearance for operations under poor job site conditions. These steering, drive and suspension systems give the same operating capabilities as a rough terrain crane.

Lifting capacities on All Terrain Cranes exceed comparable truck-mounted cranes and can range from 60 to over 1000 tons depending on the model.

Because this crane type has the ability to perform equally as good as the Rough Terrain and the Truck Mounted Cranes it is fitted with outriggers to stabilize and level the crane, and utilizes hydraulic telescoping booms.

CRAWLER MOUNTED

Crawler Mounted Mobile Cranes are available with either a telescopic boom or lattice boom upper works assembly. These cranes are available with the same types of boom extension configuration as the aforementioned Truck Mounted, Rough Terrain and All Terrain Cranes.

The lower works of these machines consist of a set of crawler tracks which provide their traction and stability. The tracks are then mounted onto a car-body [chassis] onto which is mounted the cranes upper works. Certain types of crawler cranes will have the ability to extend their tracks giving a wider base to increase stability and/or lifting capacity. Heavy-Lift Crawler Cranes may have special attachments such as large extended counterweights to offset mast lengths and increase lifting capacities.

While these cranes are considered mobile cranes, they are transported to and from the job site on trailers, and once at the site, they crawl at very slow speeds. Their site mobility is very limited when traveling with long components of boom, and this movement requires level ground. However, Crawler Cranes can adapt to job sites with poor ground conditions since the crawler tracks help to spread the ground bearing pressure. Lifting capacities range from 500 to over 1750 tons.

As Crawler Cranes do not have outriggers to facilitate leveling of the crane, it is vital that the operator ensures a level working surface is available when operating the crane. (ASME B30.5 Mobile Cranes limits out of level to a maximum of 1% grade or 0.57 degrees.)

Crawler Cranes are rented both 'bare' and 'operated and maintained', and therefore are popular with crane rental companies and general contractors.

BOOM TRUCKS/KNUCKLE BOOM
(ARTICULATING) CRANES

Variations in Boom Truck design are largely due to the advantages obtainable for the specific applications. One example of a suitable design for a particular application is the "Knuckle Boom" crane. This type of crane is capable of handling loads in confined space by using a 'hinged' boom design. The boom folds or "articulates" with hydraulic pressure and/or winch drums and cables.

A second type of boom design utilizes hydraulic or articulating booms similar to other types of mobile cranes discussed earlier. This type of boom can also have boom extensions such as "swing-aways" and/or manual extensions.

Unlike other types of mobile cranes, the Boom Truck is not mounted on a carrier which has been specially designed for crane operations. They are usually mounted on a commercial truck chassis that has been strengthened to accept the crane.

Sometimes referred to as "Utility or Winch Trucks", the Boom Truck is the workhorse of maintenance crews and is particularly useful where quick set up, load carrying and road travel are required.

Boom trucks are generally fitted with stabilizers or outriggers to give extra stability to the machine during lifting operations. Frequently 'bare' rented, lifting capacities range from 15 to 60 tons. These types of units are popular with small crane rental companies and equipment rental companies.

INDUSTRIAL CRANES

The Industrial or Carry Deck Cranes are generally light duty rubber-tired cranes designed and built for use in factories and workshops where the travel and operating surfaces are significantly better than those found on construction sites.

These cranes can have a boom which can have no swing, partial swing or 360 degrees of swing. When used for 'pick and carry' operations, they employ a carry deck built with a platform specifically for the carrying of loads, whereas the 'pick and carry' crane is designed for lifting and traveling with the load suspended from the hook.

They utilize a hydraulic telescoping boom, winch and hoist ropes as part of the crane identical to those of some mobile canes discussed earlier.

Industrial Cranes may have outriggers fitted for extra stability, and most have a low center of gravity which permits the crane to operate in narrow factory aisles and runways, possibly without the assistance of outriggers.

The Industrial Crane is highly maneuverable and can have two or four wheel steering configuration. These cranes are generally owned, but if rented, they are 'bare' rented.

STATIONARY CRANES

There are various types of stationary cranes, but for the purpose of this report we will focus on tower cranes. Tower cranes are a common sight at almost any major building construction site. These are the cranes with the tall central shaft, a long horizontal boom and counterweights located behind the operator’s cab. Their main advantage is that the operator and working boom are located above the construction site. These cranes generally are fixed horizontally; however, some have luffing (boom can raise and lower) capabilities. Tower cranes arrive at the construction site on numerous trailer trucks, and a mobile crane is used to assemble the mast sections (vertical section), boom (horizontal section), operator's cab and counterweights. Most construction companies rent their tower cranes from a specialty company that handles the installation and disassembly.

There are four general types of tower cranes:

  • Tower Cranes - A hoisting device used in the erection of high-rise buildings, these type cranes that can either be erected within the structure of the building or fastened to structural members on the building’s external skin. An internal tower crane has a fixed configuration. Its vertical section remains the same length throughout the term of the construction, and it rises via hydraulic jacks from floor from floor. The building structure is used to support the weight of the crane, often in excess of 50 tons. External tower cranes rise with the building via a series of climbing frame sections and hydraulic mechanisms.

    The mast rises from a firm foundation or base, usually a pre-laid concrete pad in close proximity to the building, and is affixed via large anchor bolts embedded in the concrete. As the building rises, additional climbing frames are added [see picture] until the building is topped off. External tower cranes can rise hundreds of feet into the air, and the horizontal boom can reach out over the structure. A trolley hangs under the boom capable of lifting and horizontally moving everything from structural steel, concrete, building materials, to large HVAC equipment and various pieces of contractor’s tools.

  • Stationary Cranes - A static or fixed crane, either free standing or supported by the structure itselfmounted on a concrete base mooring via some other type of substantial mounting.

  • Traveling Cranes - An otherwise static crane, usually with a bogie or rail-mounted undercarriage, usually on fixed rail tracks, that allows the crane some degree of travel while under load The classic example of this type of crane is the type used to load and off-load containers from marine vessels but tower cranes are sometimes mounted on these traveling rail systems.

  • Self-Erecting Tower Cranes - Relatively new to the North American market, these cranes are either towed or trucked to a job site where they are capable of erecting themselves.
Tower cranes sometimes fail, and the following have been established as some of the more common causes of failure:
  • Improper erection of the crane
  • Improper bracing of the crane
  • Lifting eccentric loads
  • For internal climbing tower cranes, the building’s structure may not have been designed properly to support the weight of the crane and its load
  • Operator error whether from tampering with limit switches or other safety devices to not properly trained (Tower cranes are not equipped with operator assist features that permit simple access to overriding the system. To override a tower crane overload warning system typically requires tampering with the limit switches that are not accessible from the operators cab.)
  • Use in high winds


III. EXPOSURES & GENERAL UNDERWRITING CONSIDERATIONS

POLICY TERMS AND CONDITIONS

Most insurance carriers, when insuring cranes provide coverage under a Contractors Equipment Form along with the insured's other equipment, either a form of their own design, or acceptance of a broker’s form, or possibly even a form developed by an insurance service provider, e.g. ISO or AAIS. In most jurisdictions Contractor’s Equipment is a non-filed class of insurance, and this gives the underwriter considerable leeway to tailor policies to fit each insured’s operation.

Policy forms, while unique in design to each of the above entities, generally have a common structure and some common elements as follows -

  • Covered Property or Property Insured:

    This policy provision will state that the policy insures contractors equipment and machinery, including spare parts, repair parts, tools and accessories as specified in the declaration section of the policy the insured owns, or property of others held by the insured and for which the insured is liable. It is in this area where coverage for cranes would be spelled out.

    Coverage is granted on either a scheduled or blanket basis, although it is common industry practice to specifically schedule cranes irrespective of the method of scheduling.

  • Covered Cause of Loss or Perils Insured:

    Coverage for contractors equipment can be written on either a special form ["all risk"] basis or on a named perils basis. Subject to market cycle conditions, ‘all risks’ is generally most prevalent, and this means the policy insures against "all risk of a direct physical loss or damage to the insured property from any external cause, except as otherwise excluded."

    Some contracts are written on a Named Perils basis or Specified Perils basis, which states specific perils under which a loss would only be covered. In most cases the common causes of loss would include fire, extended coverage perils, vandalism & malicious mischief, and theft.

  • Valuations:

    There are four (4) types of valuations one may encounter when insuring Contractors Equipment (Cranes).

    • Actual Cash Value or ACV

      This is the most common basis where the carrier will pay the actual cash value [ACV] of the property - the cost to replace or repair damaged equipment less depreciation and obsolescence. ACV is often difficult to assess on partial losses, therefore one may find explanatory wording such as - and shall in no event exceed what it would then cost to repair or replace the same with material of like kind and quality at the time of loss.

    • Replacement Cost

      Under this valuation method, the insurance carrier will pay not more than the replacement cost of the property insured without any deduction for depreciation at the time the loss occurs. The replacement cost is limited to the cost of repair or replacement with similar material of same like and function. Replacement cost valuation does not apply unless the damaged or destroyed property is repaired or replaced.

    • Functional Replacement Cost

      The carrier will not pay more for loss or damage on a Functional Replacement Cost basis than the least of the following:

      1. The limit of insurance applicable to the lost or damaged property
      2. The cost to replace the lost or damaged property with other property that is of comparable material and quality or used to perform the same function.
      3. The amount you actually spend that is necessary to repair or replace the lost or damaged property.

    • Agreed Amount

      All parties have agreed on the designated value of the property. This is done by appraisal and there is no coinsurance applicable.

    Each Valuation basis described has different wordings based on the insurance carriers policies, or broker forms that are sometimes used.

    These are examples of Valuation methods. Many carriers will grant Replacement Cost Valuation on newer equipment and Actual Cash Value on older equipment. Contractors Equipment that is smaller equipment in value depreciates quickly than the larger valued equipment depreciation. Overall, equipment will hold its value longer if the equipment maintenance history is good, or if there is a shortage or high demand for used pieces of a particular type of equipment. It is not unusual to see certain types of cranes still functioning forty (40) to fifty (50) years after they were manufactured. Agreed Amount valuation generally will be used on these types of cranes due to their longevity and demand in lieu of ACV valuation.

  • Deductible:

    As respects to cranes, a percentage deductible with a Minimum Deductible dollar amount is often used by the insurance underwriter in lieu of a dollar deductible. Common deductible percentages range from 2% to 5% of the limit of insurance for items involved in loss. How one applies a percentage deductible is a function of individual company philosophy and market conditions, and is often subject to a Minimum Deductible expressed as a dollar amount, e.g. $2,500. Some insurance carriers may use a split deductible where cranes may be part of an overall equipment schedule, e.g. $5000 for equipment values <$100,000, and $10,000 for values >$100,000.

    The Minimum Deductible will be predicated on the values that the schedule of equipment represents. A flat deductible can range anywhere from $2,500 and up depending on the size of the schedule and insurance company philosophy.

    Due to the high value of cranes, insurance carriers often impose higher deductible percentages or flat dollar deductibles to make sure the insured is safeguarding the operation of this high valued equipment. Carriers look to insure that the operators of cranes are experienced and educated on the equipment prior to them using it. If not, the insured will be picking up a larger sum of the loss due to the deductible imposed upon them.

  • Coinsurance

    Each company will approach this differently, and sometimes this will vary between individual accounts. Coinsurance percentages vary due to individual company underwriting guidelines, producer and insured requests. Large schedules might receive less stringent coinsurance percentages. One thing to keep in mind, the Valuation Clause will have a determining impact, i.e. if a policy is underwritten on an Agreed Value basis, then coinsurance does not come into play

  • Exclusions

    Again, since contractors equipment is not a filed class in most jurisdictions, the construction of a policy’s Exclusion Clause is subject to producer/underwriter/insured negotiation. For example, as respects cranes, policies generally have a weight of load exclusion that reads something like:

    Weight of a load exceeding the applicable load rating of the
    equipment according to the load rating chart published by the
    manufacturer of the equipment

    However, individual account level negotiations may bring this exclusion into a covered peril area if the underwriter knows the insured has established written policies and procedures as well as experienced operators.

TYPES OF RENTAL AGREEMENTS

When cranes are loaned or rented, with or without an operator, the renter (lessee) is usually responsible for any and all damages caused to the equipment while in its care, custody, and control. Most Equipment Rental Companies will use a contract known as a "Bare Rental" agreement. This agreement will contractually state what the lessee is responsible for.

An issue which doesn't affect the insurance but should be reviewed is who will be operating the crane? An operator who is an employee of the owner (lessor) generally should have more experience with the crane and its capabilities. An operator employed by the lessee, may or may not have experience to safely operate the crane. Most "Bare Rental" contracts will require the lessee to provide "competent and experienced" personnel to direct the operation of the crane.

The owner (lessor) of the crane will require within the agreement, that the lessee provide adequate insurance coverage for all lines of insurance, including property/inland marine. The lessor will also require the lessee to be named an. "additional insured" and be a "loss payee" on the lessee's policy.

When insuring a contractor who owns, and either loans or rents his crane to others, an underwriter should confirm what contracts are being used and who is liable for damages. The contract agreement should be signed by both parties to be legal. If the owner loans their equipment, there may not be a formal contract in place. The insured should have a written policy dealing with loaning equipment to others.

When a loss occurs involving a rented crane, the claims adjuster should immediately review the rental contract to determine who is financially responsible for the damage as these contractual agreements are critical in order to have a true measure of the exposures.

When insuring a contractor who rents cranes, an underwriter should be clear as to what type of equipment they rent and how often they rent it. Unless specifically excluded, any rented equipment generally will be covered to the policy limit or the rental sub-limit stated within the policy.

CRANES AND WATERBORNE EXPOSURES

The waterborne exposure associated with the operation of cranes on a barge presents unique underwriting concerns. In addition to the majority of factors that face the underwriter on land-based use, there are a set of other variables encountered when a crane is operated on the water that need to be evaluated.

  • POLICY CONDITIONS ENCOUNTERED

    Most inland marine forms do not contemplate waterborne exposures and will need to be amended if this exposure is a possibility. As many unique underwriting exposures are present, consideration for warranties might be reviewed. For example, the underwriter might consider the undertaking of certain key segments of the project only within the presence of an agreed upon, qualified marine surveyor.

    That is a vital consideration in underwriting any venture involving a crane operation from a barge. A surveyor can identify key elements of the vessel; equipment to be used; the type of lifts to be made; anticipated weather and water conditions; as well as marine traffic exposures; most of which are unique to a waterborne exposure. A crane that is being moved by barge and/ or will be working aboard a barge should be subject to inspection by a competent Marine Surveyor. The Surveyor should be tasked with doing a suitability survey of the barge and approving the load, stow & securing methods of the crane aboard the barge, as well as identify any operating limitations. All of these factors are interrelated and a qualified surveyor can bring proper perspective to the project.

    There are several types of surveys that can be requested of the marine surveyor -

    • On Hire/Off Hire Survey - a survey that only documents the condition of the barge when received, and compares it to the condition of the barge when it is returned to its owner (off hire). This determines what damage(s), if any, were incurred during the charter period.
        Note - The surveyor typically does not comment on the suitability of the barge for the intended service and is only documenting its condition.
    • Suitability Survey - this additional service asks the surveyor to comment on the barge’s fitness for the intended service, and often offers recommendations that the insured will need to comply with.

  • TRANSPORTATION

    There are different transit scenarios that must be understood when underwriting a waterborne exposure. If the insured owns the barge and power unit (tug) in addition to the crane, then an analysis of the transportation is needed any time the unit is transported from one job site to another.

    If non-owned equipment is used, the most common practice is to have equipment leased for each job. One key question that needs exploration - when will the insured’s responsibility for the equipment begin and end? Responsibility could begin when the barge (with or without equipment) is being transported to the job site or upon delivery to the job site. The crane may or may not be included in the transportation, which will result in the equipment being loaded on the barge at the job site. The loading of the crane will provide underwriting concerns as the loading site must be appropriately prepared prior to and during loading. Ballasting of the barge is a critical concern here.

    The experience of the transporting operator should be investigated and the degree of liability should be understood. Consideration should be given to including wording in the policy addressing the non-waiver of liability if that is the case.

  • VESSEL USED

    As stated earlier, the barge must be of the proper specifications for the size and use of the crane and it must also be in sound condition. The barge must also be secured in a fashion appropriate for the sea conditions at the job site. If the nature of the work to be performed is such that the barge will need to be moved often, then it will be critical to have qualified marine operators employed and proper securing procedures being maintained.

    Based upon the size of the crane and the work to be done, the barge should be equipped with appropriate hardwood mats to not only provide for protection to the barge, but also allow for needed securing and maneuvering of the crane on the barge. These mats will also provide needed weight distribution.

    When the choice of a barge is made, often just the size and weight of the crane and the anticipated weight of the lift is taken into consideration. Additional factors which may prove very critical is the actual work being performed and area needed include:

    • Will there be lifts over the side of the barge? This creates two scenarios. If not secured correctly, this could result in a twisting effect on the boom. It is preferable that lifts be made over the bow of the vessel. Secondly, side lifts can cause an 'overturning moment', i.e. on water the barge will tend to absorb the weight (especially if the crane is secured with tie -downs) and this will be transferred to the barge causing a potential capsize.

    • Will the crane be moved while in operation on the barge? The operation of a crane should be done within the dimensions of the barge itself. Unlike land-based use, if there is an overload of the boom, the crane will not tend to tip, but the barge might introducing a potential capsize.

    • Will construction materials be placed on the barge? Often the weight of construction material is not known and the specifications of the barge might only be suited just for the weight of the crane. Additional materials on the barge could present a challenge to the overall weight capabilities of the barge and will also restrict the working area of the barge surface for crane operations. These space restrictions might result in boom positioning that might not be appropriate for the lift.

    • Who will be supervising the work? It will be critical that the supervision be conducted by personnel that not only have adequate experience with crane operation, but also understand the various marine exposures that will be present. As indicated initially, the use of a marine surveyor will be an important consideration not only at the beginning and end of a project, but also at key milestones during the project. A competent marine surveyor or naval architect should create operating parameters under which lifts and their radius can be safely made. These critical points should be mapped out prior to the work being started.

    • Is there a contingency plan in place for severe weather conditions? Arranging for a protected anchoring before a storm event is far more prudent than scrambling in the face of severe weather conditions. Understanding the time of the year when work is to be done and taking into account local weather, sea conditions and marine traffic will assist in the proper identification of the degree of exposure and the required precautions.

      The use of tandem lifts on land is extremely complicated. Tandem lifts on the water requires a higher degree of planning and supervision due to the many additional variables.


IV. MANAGEMENT PRACTICES AND TRAINING

The overall approach and attitude of management is the most critical element of underwriting the crane contractor. The underwriter must be satisfied that effective administrative experience and controls are present.

Central to this issue are:

  • Experience of the management team, not only in crane operations in general, but in the type of operation in which the insured is currently involved. This is particularly important in specialized operations such as heavy rigging and material handling. A job list or bid list will afford a good insight here as well as verification of a sound agreement.
  • A review of current audited financial statements should reflect historical profitability and a positive cash flow.
  • The use of only fully trained, qualified and experienced operators and subcontractors. Training should be ongoing as job requirements and the equipment used change over time. Use of operators certified by an independent accredited third party is highly recommended.
  • Formal accountability program in place (raises - promotions - continued employment depends on following company policies and safe practices).
  • A formal safety program, including weekly meetings and accident reviews.
  • Pre-employment and on-going physical screening of all employees.
  • Certificates of insurance required of all subcontractors within the insured's control to monitor compliance.
  • Ownership involvement in day-to-day operations.
LIFT PLANNING

Company operating policies and procedures should define what can be considered a critical lift, and the procedures that must be followed before a critical lift can be made. All critical lifts should be pre-engineered relative to both the load and the equipment to be used.

Look for:

  • Policies and procedures on classifying crane lifts such as, but not limited to, regular lifts, permit lifts and critical lifts.
  • Policies and procedures describing risk mitigation tools to be used for lifts other than regular lifts.
  • Policies and procedures for the use of a lift director for all lifts other than regular as well as pick and carry lift.
  • Pre-lift jobsite engineering including identification of existing and potential hazards, such as: soil conditions and stability; wind and weather; earthquake and flood; and ground water run-off.
  • A survey of any over-the-road exposures due to equipment in transit. (e.g.: bridges, overhead restrictions and obstructions and road conditions)
  • Proper storage and security of any equipment to be left at the jobsite.
  • A formal equipment inspection program performed weekly and prior to all critical lifts.
  • Accurate load weights established during pre-lift engineering and verified at the time of lift. Do not rely upon invoice weights, as they may have been understated to avoid additional shipping charges.
  • Pre-qualification of any subcontractors used for specialized rigging or hoisting with certificates of insurance. Verify adequate limits and coverage as well as our insured named as Additional Insured.
  • Control of any unique or unusual exposures, such as: blasting, underground work, waterborne operations, pick and carry lifts or tandem lifts.
EQUIPMENT CERTIFICATION

Cranes wear out and break. Crane maintenance and inspection is critical in avoiding accidents. Good accounts will have written policies and procedures on maintenance and inspection with good written records. Maintenance should meet or exceed the crane manufacturer’s requirements. Inspections will meet or exceed the requirements of either 29CFR 1926.550 or the applicable volume ASME B30. When looking at inspection records, look at the inspection work sheet and not the window sticker. Then look to see if deficiencies have been corrected. Also, look for evidence of "pencil whipping" on the work sheet, check marks indicating something is "OK" and the crane does not have one are signs of inadequate crane inspections."

SAFETY LAWS AND REGULATIONS

Various state and/or federal standards or regulations have been developed that can further enhance the safety of crane operations. These procedures can be divided into five (5) general categories -

  • Operator training
  • Crane certification
  • Maintenance and inspection
  • Communication
  • Electrical procedures
Most of the current rules and regulations involving cranes seem to deal with personal safety matters - avoiding injury to the general public or workers.

The Occupational Safety and Health Administration (OSHA) recognized in 2002 that there was a need to establish construction industry standards for the operation of cranes. OSHA subsequently announced in the Federal Register on July 16, 2002 [Volume 67, Number 136] its intent to establish a Cranes Rulemaking Committee. The Committee’ purpose was to investigate issues associated with the development of proposed revision of the existing construction safety standards found in the Code of Federal Regulations (CFR), Sec. 1926.550 which dates back to 1971.

With the exception of two revisions -

  • one in 1988 dealing with the conditions under which employees on personnel platforms may be hoisted; and
  • another in 1993 stating that all employees shall keep clear of loads about to be lifted and of suspended loads
the Committee has made no substantive changes.

Three basic divisions were believed to be needed:

  • General Industry;
  • Construction; and
  • Maritime.
The Committee has some key issues for discussion confronting it including -
  • The identification/description of what constitutes a crane or derrick for the purposes of determining equipment that will be covered by any new rule.
  • Qualifications of individuals who operate, maintain, repair, assemble or disassemble cranes or derricks.
  • Work zone control.
  • Crane operations near electric power lines.
  • Qualifications of signal persons and communication systems.
  • Load capacity and control procedures.
  • Wire rope criteria.
  • Crane inspection and certification records.
  • Rigging procedures.
  • Requirements for ‘fail-safe’, warning and other safety related devices/technologies.
  • Verification criteria for the structural adequacy of crane components.
  • Stability testing requirements.
  • Blind pick procedures.
Any underwriter of cranes knows that this list is vitally important in the insurance of cranes. Unfortunately, until rules are established, virtually every one of these items is missing from today’s crane environment.


V. OPERATOR TRAINING

Crane operator training is intended to reduce or eliminate the possibility of human-related factors in crane accidents. In the US, the National Safety Council [NSC] has set the following minimum qualifications for crane operators in their Accident Prevention Manual for Business and Industry: Engineering and Technology. 10th Edition-

  • Be of legal age in the geographic area where they operate the crane
  • Speak and understand written English
  • Pass a physical examination including an eye test for depth perception
  • Have adequate understanding of the crane they are operating
  • Demonstrate satisfactory skill in operating the crane
When one considers that the person operating the crane is operating one of the most expensive and critical pieces of equipment on the job site, words like 'adequate understanding' and 'satisfactory skill' - both undefined terms - do not give much comfort to the insurance underwriter. One should obtain additional information about how a particular company selects and trains its crane operators.

Available industry loss data indicates that almost 80% of all crane losses can be attributed to operator error. However, the training and certification of crane operators leaves much to be desired.

Most operators have received their training from one of the following -

  • Vocational or union sponsored schools
  • Individual company training programs
  • On-the-job training
  • By one's 'seat of the pants'
All are limited in scope, require a minimum of classroom education, and lack on-going education.

In the mid-1980’s a not-for-profit entity - Board for Crane Operator Certification, Inc. - founded in San Antonio, Texas, attempted to establish the basis for crane operator certification. They created this entity with the following expressed purposes -

  • To promote and advance the professional status of crane operators.
  • To improve proficiency of the operator, and generate job safety awareness.
  • To assist employers in ascertaining operator knowledge and experience.
These noble efforts, which included a written test and 'hands-on' field testing, has not had a dramatic impact on the reduction of crane accidents. As previously stated in this report, standardized and universal operator certification is still an elusive goal. All too often, the technological advances of the crane manufacturer have out-raced the continuing education required to achieve proficiency with new iterations of equipment.

However, in 1996 the National Commission for the Certification of Crane Operators (NCCCO) started certifying mobile crane operators in 4 categories. Today they also certify tower crane and overhead crane operators as well and are currently developing certification programs for riggers and crane signal persons. Certification by an independent and accredited third party is considered by most crane professionals as the best approach to crane safety. However certification by itself does not assure safety, a full accountability program along with crane operator certification will reduce accidents.

In October 2007 the NCCCO announced that it had been awarded accreditation by the American National Standards Institute (ANSI) for all three of its crane operator certification programs

  • Mobile Crane Operator
  • Tower Crane Operator
  • Overhead Crane Operator.
Accreditation by ANSI to the ISO/IEC 17024 International Standard for organizations that certify personnel came after rigorous onsite and field audits by ANSI assessors of NCCCO's management systems and psychometric procedures. Singled out for particular mention by ANSI were the preparation, administration and execution of NCCCO's practical exam program. ANSI applauded the manner in which the tasks for the practical exam had been selected, the objectivity and clarity of the criteria that had been established for practical examiner observations, and the systematic way examiner observations had been integrated into the scoring process.


VI. LOSS CONTROL

Loss control personnel assigned to be the underwriter’s eyes and ears at the job site must be familiar with cranes, their operation and the operators. This should be required for any initial survey and follow-up visits due to the highly technical and specialized nature of the crane business, and is a must for any specialized lift prequalification.

Employee Screening

  • The employment screening process for heavy equipment operators should include a drug screen test, in addition to the Motor Vehicle Record [MVR] review, which is already required.
  • The background review should include verification of any required education or certification requirements for heavy equipment operators, as well as verification of critical prior employment experience.
  • The qualification testing procedures for new-hire crane operators should be documented and formalized. Alternatively, independent certification, such as NCCCO certification, could be considered. If internal qualification is used, it would be recommended that the testing include the following elements:
    • Description of operator’s responsibility for maintenance of the crane and for safety inspections, including the types of reports to be completed and frequency of inspections.
    • Description of the criteria to be utilized for the visual inspection of wire ropes and cables.
    • Description of the importance of the capacity chart.
    • Demonstrate how the crane’s capacity chart is used to determine the crane’s lift capacity, at different operating radii or boom angles.
    • Company definition of a Critical Lift
    • Description of the importance of the Critical Lift Plan and what procedures have to be followed before a critical lift is made.
Equipment Design and Manufacturing Features
  • Cranes should have a permanent, durable plate with the:
    • Manufacturer’s Name
    • Model number
    • Serial number
    • Year built
    • Weight
  • All crane components and attachments such as outriggers, counterweights, jibs and boom sections should be clearly marked to show they are specifically designed to work with the crane.
  • Any components or attachments designed, manufactured or altered by anyone other than the Original Equipment Manufacturer (OEM) should be certified by an independent, qualified engineer.
  • Cranes should have a load chart that is attached to the cab and in a location easily accessible and visible to the operator from the control station. The chart should have the following information:
    • Crane model number
    • Crane serial number
    • Date of manufacturer
    • Load rating for the main boom at all stated operating radii, boom angles, boom lengths and boom types
    • Jib rating
    • Wind velocity operating limits
    • Low temperature operating limits
  • The operator’s cab and control station should be:
    • designed and built to protect against the elements
    • designed and built to provide the operator a clear and unobstructed view of the load and boom point, visibility to either side and as clear a view of the job site as possible
    • fitted with a lock to prevent unauthorized access/entry
    • equipped with adequate lighting
    • equipped with windshield wipers to ensure the operator’s normal viewing area is clear
    • equipped with a windshield defroster
    • equipped with a fire extinguisher
    • designed so that the controls are located within easy reach of the operator
    • designed so that the controls are clearly marked to indicate their function
    • designed so that the controls move in the direction of the desired load or crane movement
Crane Inspection, Testing & Maintenance
  • Cranes should be inspected and tested in accordance with the industry and/or regulatory standards. Testing is also necessary to prove that any work carried out on the crane has been done properly and that the crane is capable of performing safely.

  • Inspections should be done by a certified crane inspector and should take place:
    • Prior to initial use
    • After any accident
    • After every major repair, overhaul or alteration
    • After major modifications
    • After every major assembly or strip down for transportation
    • Prior to use if it has been idle for at least 6 months

  • As much as practical cranes should be inspected daily as well as being observed during operation for any signs of damage or defect.

  • Cranes should be maintained in accordance with the manufacturer’s recommended schedule. Cranes should be maintained as needed with the work resulting from the periodic inspections of the equipment or observations during operation.

  • The maintenance program for the cranes should include the following elements.

    • Description of inspections to be performed on the cranes, frequency of inspections, responsibility for completion, and reports to be maintained.
    • Identification of preventative maintenance required for the cranes, as recommended by the manufacturer (or by the operator), and a tracking system developed to ensure that critical maintenance is completed.
    • Identification of who has the responsibility for completing the maintenance and whether inside mechanics or outside contractors.
    • There should be a documented process for the review and implementation of any service advisories or alerts that may periodically be received from the manufacturer.
    • A maintenance file should be kept for every crane.

  • There should be a log book with the crane serial number that is kept throughout the working life of the equipment. The log book should contain the details of all maintenance as well as revisions, modifications, inspections, tests, repairs and incidents.

  • The log book should be transferred with the crane if it is sold.
Operation
  • Cranes should be operated only by trained, experienced and competent operators.

  • For operations in coastal areas that are subject to storms or hurricanes, request a copy of the Hurricane Contingency Plan for the operation. This should also be reviewed by underwriters or Loss Control for comments and recommendations.

  • The company should have a documented Safety Program, which should include regular safety meetings (daily tool box, weekly and monthly meetings), as well as periodic management review of safety statistics & losses. Safety training topics should be developed and planned, based upon risk assessment and loss experience.

  • The company should have an Incident Review Program under which losses are investigated to develop corrective and preventative action to avoid recurrence. The person conducting the loss/ incident review should be familiar with the company's operating and safety procedures and comment on whether or not there was any noncompliance with these procedures. Noncompliance with the company’s documented safety procedures can suggest possible training issues.
Crane Selection
  • Selection of a crane for any lifting operation should be made based on a number of factors:
    • type of lifting to be done
    • weight, dimensions and lift radii of the heaviest and largest (footprint) load
    • maximum lift height
    • number of lifts and at what frequency
    • whether the load to be lifted has to be walked or carried
    • whether the load to be lifted has to be held in the air for long periods of time
    • environmental (ground, weather, access and operating areas, etc.) conditions
    • any physical or operational obstacles

  • The crane selected should be able to make all of its lifts in its normal configuration. Cranes should have at least a 5% safe working margin based on the load capacity of every lift.
Rented/Leased Equipment
  • Cranes should only be rented from reputable firms or contractors

  • Crane requirements given the tasks should be clearly defined (written) in the rental/lease agreement


VII. CLAIMS ADJUSTMENT

The almost indispensable use of cranes in the construction industry has led to a number of crane accidents, some of which have been the most spectacular in the entire construction industry. It is for this reason that the prudent underwriter should work with the company's loss control and claims departments when underwriting an account with crane exposures.

DOWNTIME

Some policies require that the carrier provide a replacement crane until the damaged crane is fully repaired and back in service. In such cases underwriters should understand that cranes manufactured overseas take much longer to obtain parts than cranes manufactured in the United States.

SALVAGE

Internet salvage/auction companies create an online marketplace for salvage buyers and sellers to come together in a transparent environment and let them determine fair market value and allow product expertise and technology to bring more buyers to each auction. These companies are serving to eliminate potential conflicts of interest when disposing of assets and have proven results that are gaining the trust and confidence of insurance professionals, risk managers and asset managers.

THINGS TO LOOK FOR IN A REPAIR FACILITY

Cranes damaged in an accident should only be repaired by a factory authorized dealer or a repair facility with full engineering capabilities that can assume the role of manufacturer. Some common criteria for selecting a repair company are:

  • Reputable Repair Service Company
  • Insured and Bondable
  • Expertise, Facilities & Resources
  • Professional Engineering Capabilities
  • Reverse Engineering Capabilities
  • Project Experience
  • Welding & Fabrication
  • Testing, Inspection & Certification Documentation
  • Full Fabrication, Electrical, Electronic, Mechanical & Hydraulic Service
  • Capabilities (Turn-Key)
  • Knowledge of Laws, Regulations & Standards
  • Warranty for Repairs
  • "Out of the Box" Thinking


VIII. CONCLUSION

As mentioned in the Introduction, insurance of cranes under a contractors equipment policy is one of the most complex areas of inland marine insurance. The Committee that developed this report endeavored to provide a broad perspective into crane insurance. As one gets involved in this niche of contractors equipment insurance, one is sure to find nuanced and unique coverage extensions and endorsements that will challenge the underwriter’s creativity and decision making. Therefore, it is imperative to fully understand an insured’s operation when evaluating its insurance needs, and seek additional advice and counsel when there are gray areas of coverage intent. To this latter point, this report contains considerable additional information and reference sources in the Appendix section.


IX. ADDENDUM - LESSONS FROM LOSSES

Before we cite several examples of losses, it might be best to summarize some of the most common types of losses:

  • Overloading of the boom due to improper use of capacity chart, (sometimes due to not knowing what the load actually weighs)
  • Boom cratering, due to contact with load or other structure
  • Boom failure due to side loading of the boom during a lift
  • Crane overturning, due to ground subsidence/ collapse, improper matting, improper use of outriggers, etc.
  • Failure of lifting slings, rigging, etc. and/ or improper rigging
  • Failures due to improper maintenance of safety equipment, such as boom limit switches, anti two blocking device, mechanical level indicator, etc.
EXAMPLE 1

A 60 foot long boom of a crane working on a Florida highway came crashing down blocking the highway and causing a multiple car accident. The crane operator was thrown from the cab as it broke free of its base and overturned. The crane was attempting to lift a metal plate while simultaneously ‘vibrating’ it to attempt to dislodge it. OSHA inspectors determined that the crane had a crack under the cab assembly, and that hydraulic fluid was leaking, allegedly causing a failure of the extended boom.

EXAMPLE 2

A well publicized crane loss, the crane collapse during the construction of Milwaukee’s Miller Park baseball stadium, is a prime example of lifting operations being conducted when the prevailing winds were gusting to 26 mph at the time of the collapse. The 567 foot tall crane called ‘Big Blue’, reportedly the largest in North America at the time, came crashing down while lifting a section of a retractable roof panel weighing some 400 tons into position over right field. In addition to the physical damage and loss of life, the claims was exaggerated in that the opening of the stadium was delayed a year due to acquisition of a replacement crane that was located in the Middle East.

EXAMPLE 3

A lattice boom crane, while attempting to move a radio station’s antenna across the roof, crumpled not only causing substantial damage to the crane, but also disrupting traffic, breaking a water pipe and knocking the radio station off the air for an extended period of time. Here, the underwriter not only had to contend with physical damage to the crane, but had also provided time element coverage and had to respond to the loss of air time and media revenue.

EXAMPLE 4

In the course of construction work on a bridge spanning a shipping canal, a multiple crane pick using five (5) cranes [two 400 ton cranes with spreader-bars - one 600 ton lattice tower crane - two 200 ton telescope jib cranes] were attempting to lift a 4oo ton section of the bridge. As the bridge section was being lifted, the 600 ton crane collapsed and tipped over. The bridge section slid out of the spreader and crashed to the ground. The chain reaction resulted in all five cranes being severely damaged (several a total loss), the channel being blocked for a period of time, and the opening of the roadway being delayed resulting in substantial contractor delay penalties.

EXAMPLE 5

A mobile crane with lifting capacity of 80 tons was required for work on a construction site. Its lifting capacity without its outriggers deployed as reduced to 43 tons. In positioning the crane, the crane operator had to cope with tight operating conditions. The chosen position was on a slightly sloping roadway which prohibited the front left outrigger from being fully deployed. The rear left outrigger extended into the construction site at an exaggerated angle on a steep slope. The two right outriggers were fully deployed. Once in this awkward position, the operator began to extend the boom and swing it in the direction of the load. Even before attaching the load, the crane toppled over resulting in damages to the crane approaching $500,000.

EXAMPLE 6

A high-rise office building under construction in a city center was the site of the boom of the tower crane buckling under load and collapsing onto the uppermost floor of the building under construction. The 20 ton counterweight of the tower crane crashed through the roof of an adjoining luxury hotel across the street, smashing into the boiler room on its upper floor further damaging the hotel. A 96 ton crane had to be brought in to conduct the salvage work resulting required which created a time element exposure for the hotel which had to be closed for several weeks.


X. APPENDIX OF RELATED WEB SITES - ASSOCIATIONS - VENDORS

MANUFACTURERS:

Link-Belt Construction Equipment Company
2652 Palumbo Drive
PO Box 13600
Lexington, KY 40583-3600
859-263-5200
www.linkbelt.com

Terex Cranes (Terex, Demag, P&H, PPM, Koehring, Lorain, Peiner, Comedil)
106 12th Street S.E.
Waverly, IA 50677
www.terex-cranes.com
319-352-9306

Manitowoc Cranes Inc. (Manitowoc, Grove, National, Krupp, Potain)
2401 South 30th Street
Manitowoc, WI 54220
(920) 684-6621
www.manitowoccranes.com

Kobelco Cranes
10845 Train Court
Houston, TX 77041
713-856-4205
http://www.kobelco-cranes.com/english/products/wheel/index.html

Liebherr Cranes, Inc.
4100 Chestnut Ave.
P.O. Box Drawer O
Newport News, VA 23605-0200
734-429-7225
www.liebherr.com

Tadano America Corporation
333 Northpark Central Dr., Ste. Z
Houston, TX 77073-6088
281-869-0030
www.tadanoamerica.com

Favelle Favco Cranes USA, Inc.
4 Mile East, FM106 Port of Harlingen
P.O. Box 3049
Harlingen, TX 78551-3049
956-428-7488
www.favcousa.com

Manitex Inc.
3000 S. Austin Ave.
P.O. Box 1609
Georgetown, TX 78627-1609
512-942-3000
www.manitex.com

QMC Hydraulic Cranes and Equipment
18071 Mt. Washington St.
Fountain Valley, CA 92708
714-754-0339
www.qmccranes.com

Elliott Equipment Company
4427 S. 76th Circle
Omaha, NE 68127
402-592-4500
www.elliottequip.com

Altec Industries, Inc.
210 Inverness Center Drive
Birmingham, AL 35242
206-991-7733
www.altec.com

PUBLICATIONS:

American Cranes & Transport
www.khl.com
International Cranes
www.khl.com

Crane Hotline
www.cranehotline.com
Lift & Access
www.liftlink.com

Cranes Today
www.connectingcranes.com
Rock & Dirt
www.rockanddirt.com

Crane Works
www.craneworksonline.com

VALUING CRANES & Construction Equipment:

Ritchie Brothers Auctioneers
www.rbauction.com
Salvage Sale
www.salvagesale.com

Crane Network
www.cranenetwork.com
Machinery Trader
www.machinerytrader.com

Iron Planet
www.cranenetwork.com
Machine Mart
www.machinemart.com

McGraw Hill Construction (fee based publications)

  • Cost Guides
  • Value Guides & Auctions
  • Serial Number Guides
  • Regional Rental Rates
  • Specifications Reference & Data
    www.equipmentwatch.com

ORGANIZATIONS / ASSOCIATIONS:

AEM (Association of Equipment Manufacturers)
www.aem.org

AED (Association of Equipment Distributors)
www.aednet.org

SCRA (Specialized Carriers and Riggers Association)
www.scranet.org

CCAA (Crane Certification Association of America)
www.ccaaweb.com

FLCOC (Florida Crane Owners Council)
www.flcoc.com

Association of Crane & Rigging Professionals
www.acrp.net

NCCCO (National Commission for Certification of Crane Operators)
www.nccco.org

OSHA
www.osha.gov


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